Severstal to invest $100M at WCI

By Don Shilling

Now that the purchase of WCI Steel is complete, its chief executive steps aside.

WARREN — WCI Steel will receive $100 million in upgrades and a new name now that it has been sold to a Russian steelmaker.

OAO Severstal, which is rapidly expanding its North American presence, said Monday that it has completed its previously announced purchase of the Warren steelmaker for $140 million.

The local company is now known as Severstal Warren.

Severstal plans to spend $100 million at the mill, mostly on maintenance work that’s needed, said Michael Hanson, a spokesman for the company. Included is a relining of the mill’s 96-year-old blast furnace in 2011.

Replacing the bricks inside a blast furnace is a critical maintenance project that’s needed periodically. In 2004, WCI spent $15 million to reline its blast furnace, which is used to combine iron ore, limestone and coke to produce molten iron.

Hanson declined to discuss other projects that are planned. He also declined to provide information about management of the mill or its staffing.

“We will have more details in short order,” he said.

WCI announced separately that Leonard Anthony has resigned as president and chief executive. He was named to the company’s top posts in December after Patrick Tatom resigned.

Bette Kovach, WCI public affairs manager, said Anthony was hired by the former board of directors to develop a plan for the company’s future and now that work is completed. Remaining a stand-alone company was considered, she said.

Anthony thanked the company’s staff, customers and suppliers for supporting WCI in the 26 months since it emerged from bankruptcy protection under the ownership of its bondholders.

“I truly believe the operations at Warren as a member of Severstal will serve its various constituencies for many years to come,” he said.

The United Steelworkers of America has supported the purchase because of Severstal’s promise of investments. The mill has about 1,100 hourly workers and 200 salaried workers.

WCI shareholders are to receive $3.29 a share. The company has about 42.5 million outstanding shares.

Bondholders received control of the company’s stock after WCI’s 30-month stay in bankruptcy. Renco Group of New York lost its ownership of the company during the proceedings.

Since then, steel prices have soared, and Severstal has added four U.S. mills. Besides WCI, it has bought mills in Michigan and Maryland and opened a new minimill in Mississippi that makes steel by reheating scrap.

shilling@vindy.com